1/ We turned bullish last Wed but werenโt expecting the short squeeze to happen quite so soon! Weโve been pleasantly surprised by how supported the market was after Wednesday & sentiment flipped decisively bullish into the weekend
2/ The QCP options desk took down a decent amount of front-end call buying flow in the last few days. Of particular note was the call demand from one or two large players who lifted about 2,500 BTC notional of close-date calls across 33k-36k strikes
3/ Market was nervously bid as we approached the 35-36k short gamma region. Dips were brief and shallow, coupled with the non-stop call buying requests popping up late into Asia night on Sunday
4/ Finally, murmurs of Amazon accepting crypto as mode of payment provided the catalyst for the short squeeze today in Asia morning
5/ In spite of the sharp move higher, the market does not feel particularly stressed. Vols have rallied only modestly and only in the very short dates. Furthermore, risk reversals remain skewed to the downside even as we close in on the 40k pivot level in BTCUSD
6/ So far, this move higher feels more like a bounce back into a neutral state after being overstretched to the downside below 30k. The real pain could be lurking from short gamma positions above the 40k level
7/ Should Amazon confirm these rumours, BTC would surely test the 40-42k resistance. If BTC price follows the 2018-20 analog that we previously mentioned, a break of 42k would take us up to 50k level in Aug-Sep before a bigger top eventuates
8/ For this weekโs other event risk, we expect the FOMC to remain dovish, following Powellโs congressional testimony 2 weeks back post-inflation and other Governorsโ recent speeches pre-blackout last week
9/ While the majority still remain sanguine about transitory inflation, we expect by Q4 more urgency will come and they will join the few Hawks who have already sounded alarm bells over rising inflation and spillover financial stability risks.
1/ Another try at breaking 40k-42k in BTCUSD today despite Amazonโs firm denial of the rumors about them accepting crypto as a mode of payment
2/ The QCP options desk saw the same pattern of flow in the options market that occurred before the Monday rally, a wave of call buying (over 2,000 BTC notional at 42k-44k strikes across 3-week expiries)
3/ In addition, there was an unusual spike in the FTX margin lending rate to 300% in line with the large spot buying on FTX at the same time
1/ There's been much talk about the upcoming GBTC share unlocks which begin in earnest next week. We've discussed Grayscale and GBTC previously but would like to go into greater detail in the second part of this note
2/ GBTC is still primarily a retail vehicle, where the known public institutional holders account for 12.21% of the total outstanding shares - of which 3AC is the largest shareholder at 5.62%, holding a very auspicious 38,888,888 shares. The upcoming unlocks are for..
3/ ..institutional holders who subscribed directly to GBTC 6 months ago & this batch consists of all the new Q1/2021 positions, largely ARK's last tranche. To be clear- we dont expect these unlocks on its own to have significant impact on the overall market outside of GBTC itself
1/ Positive start to the week as we enter the second half of 2020 with promising bounce off the lows.
2/ Since the 26 Jun technical alert , BTC price rallied above 36,400 level yesterday, still 3,000 points from the 39,400 BTCUSD target level. We saw the defining low last Tuesday following our tweet flagging โTurnaround Tuesdaysโ
3/ Since then, BTC has found good support at the 30k level. Leaning on this, we've formed a moderately bullish bias.
Our favourite trade continues to be short BTC strangles within the 30k/40k range (from the 21Jun broadcast)
The FOMC meeting last week had hawkish sentiments that the market wasn't expecting or pricing into the June meeting
2/ From an objective perspective it was a rather neutral decision, as Chair Powell kept talking up the transitory nature of inflation and the rest of the committee had kept their longer-run inflation forecasts close to 2% as well, indicating they believed the same
3/ However the shift in stance at this meeting itself - where Powell said that they would begin talking about tapering, rather than talking about talking about doing it, which was earlier than most expected, and showed that this FOMC under Powell had a red line too..
1/ The market looks like it's long gamma with BTC being pinned around the 40k level as we await FOMC headlines tomorrow. We agree with Paul Tudor Jones that this coming FOMC meeting will likely have a binary market reaction
3/ Should the Fed remain dovish, cryptocurrencies would have the most upside potential until September at least. Especially given the overselling we've seen relative to other macro markets since the May CPI printโฆ
1/ BTC Implied Volatilities have been coming off steadily since it peaked the weekend before and is looking to move towards levels we saw at the start of May
2/ We are still cautious of potential BTC downside as the vol skew remains high with Puts being substantially more expensive than Calls
3/ We expect spot to trade in a range (short-term) with a slight bullish bias as frenzied leveraged longs have been washed out. Weโve seen significant buying & selling at 30,000 BTCUSD and 40,000 BTCUSD levels respectively